Funny Stock Market Math

[Danoff]

I figured this would be fun since most of us are getting killed in the market right now.

Let's say you have $100 invested in a stock/mutual fund. Your fund goes down 10%, then it goes up 10%. How much money do you have?

Now let's say your $100 first goes up 10%, then it goes down 10%. How much money do you have?

Kinda sucks huh?

 

[Dave A]

You'd have $99 in both cases, yes the market does suck right now. Great time to buy, bad time to already own :sad:.

 

[Danoff]

You'd have $99 in both cases.

Sucks doesn't it? It just doesn't seem right to me.

 

[Dave A]

What really sucks is owning shares in a promising company that suddenly get's bad press based on false information, the company proves that it was false but the shares don't go back up to anywhere near where they were before.

 

[Duke]

We had inherited a certain amount of stock in a small local bank. It got bought out by a regional bank; the shares doubled and we got a buyout bonus. The the regional bank got bought by another regional bank, and we got another buyout bonus. Finally it got bought out by a national bank and the shares doubled again. This left us with damn near all of our investment tied up in one stock, even though the risk had really paid off in the go-go '90s.

So, around 1999 or 2000, we decided it was prudent to diversify and spread it around. We set up a portfolio of mutual funds. All of these promptly lost 20% and then flatlined. We're supposed to be concentrating on growth at this stage, and I'm starting to wish I had ridden the lightning a little longer.